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GENCOs, TCN trade blame over wasted energy


Electricity Tranformer

Electricity Tranformer

• GENCOs Groan Under Heavy Unsettled Debt
• Kainji, Jebba May Shut Down Over N44B Debts
• We Have Capacity To Wheel 6000MW Of Generated Power, Says TCN

As a vast majority of Nigerians continue to wallow in darkness and industries shutting down due to inadequate energy supply, it has been revealed that at least a quarter of the country’s energy produced by the generating companies (GENCOS) running to several hundred millions of naira gets wasted.

This is because the Transmission Company of Nigeria (TCN) does not have the capacity to wheel about 4,000 MW of generated energy by GENCOS because of their obsolete and antiquated transmission equipment.

But the TCN has dismissed the claim of weak infrastructure to carry to the power generated, saying the it is capable of wheeling 6,000 MW if generated by GENCOs

Also, the situation has been blamed on the huge debt owed GENCOs by the distribution companies (DISCOs), which was attributed largely to poor revenue collection from customers.

The cumulative indebtedness to power generation companies is estimated at N140 billion and this is threatening their continuous operation. In addition to the huge debt owed them, they daily lose millions of naira revenue arising from the rejection of energy generated by them, which also poses serious negative impact on the generating equipment.

Again, the generation companies are crying wolf that the Federal Government has reneged on a very important aspect of the Share Purchase Agreement (SPA), which they entered with it on the provision of partial risk guarantee (PRG) for credits sought by them to attract investment in the companies, as well as, the denial of access of the operators to the interbank rate of the foreign exchange.

They claimed that it has become a herculean task sourcing forex from the black market (parallel market) for importation of machineries and servicing of the credits, which they obtained in hard currencies to acquire the power generating plants.

One of the power generation companies’ operators and Managing Director and Chief Executive Officer of Mainstream Energy Solution Ltd, a firm to which the Kainji and Jebba Hydro Power concessioned to for a period of 30 years, Engr. Lemu Audu, said it has been one harrowing experience since his firm took over the two plants in November 2013, saying the two power plants alone are being owed N44 billion for power generated and sold.

He said his plants may have no option than to shut down operations if urgent action is not taken by government to fulfill and review some aspects of the Share Purchase Agreement, like providing partial risk guarantees to the operators; liberalising the off-taker provision, which limits the power operators from selling generated power to other end users other than the national grid and finally creating access to forex for the operators.

Lamenting the huge indebtedness, he said: “Another greatest challenge is the commercial issue. This is seriously militating against our ability to continue to recover capacity and, in fact, to sustain what we even have today. We have serious liquidity issues in the Nigerian electricity market, to the extent that our invoices are not settled as at when due and completely.”

When The Guardian sought the reaction of the TCN Management in Abuja, the Managing Director in charge of Transmission Service Provider, Engr. Tom Uwah told The Guardian on phone that the claims by the GENCOS were false.

Uwah said: “Those allegations are false and baseless because we have since 2013 invested massively on our transmission infrastructure. We are not ready to join issues with anybody. But all I can simply tell you is that our infrastructure can conveniently wheel 6000MW and I know our generation is far below that threshold. Let them face their businesses or look elsewhere.”

At the Bureau of Public Enterprises (BPE), the agency, which is in charge of privatisation of all government utilities, its Acting Director General, Dr. Vincent Akpotaire, explained that the partial risk guarantees had not been provided by government, but expressed hope that early next year, the power companies would benefit from the guarantees. He said: “ Yes, they have not receive the guarantees because the Federal Government had to review the guarantee scheme, particularly as it affects private organisations. The Federal Ministry of Finance and the Debt Management Office are involved and are seriously working on it. By early next year, they should be able to finalize the work to enable them have it. We are sorting it out and the operators are aware.”

Spokesman of the Abuja Electricity Distribution Company, Mallam Ahmed Shekarau, one of the DISCOS, said though there were challenges being faced by some operators, he said AEDC does not reject power.

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